Will Royalty Fees Kill Internet Radio?
Internet radio has been around for almost as long as the internet. Like many web trends, it started out as a resource for in-the-know computer geeks.
Now, roughly 52 million people are tuning in on a monthly basis, according to a study by Arbitron and Edison Media Research.
Listeners are attracted to the commercial-free programs and diverse music selection, and artists love the additional outlet for their music.
But a new Copyright Royalty Board decision pushed by the Recording Industry Association of America (RIAA), a trade group representing most mainstream record labels, might turn good old rock ‘n’ roll into cold, hard static.
The board announced a hefty hike in the cost of royalties paid by internet radio stations. “Radio and Internet Newsletter” reports that, effective retroactively through the beginning of 2006, online stations will be required to pay $.0008 per song, per listener. The amount jumps to $.0011 for 2007 and $.0014 the following year, with an annual minimum of $500 for each channel.
For indie stations such as Radio Paradise, the new royalty rates are devastating. Founder Bill Goldsmith says, “We are now liable for royalties, retroactive to the beginning of 2006, that are equal to approximately 125 percent of our income.”
Tim Westergren, founder of Pandora.com, one of the most popular sources of music on the web, calls the move a misguided attempt to solve the record industry’s business woes.
Unfortunately, there seems to be little that can be done. Webcasters have the option of moving their broadcast overseas, but as Pam McClusky, program manager of Ram Radio, an online country station, says, “I broadcast American music and this is going to bump us right out of our own country.”
Photo by yatego.
MM on March 14th, 2007 8:54 pm
I can’t figure out why these people are complaining. They are using the recording artists content to make money. I’m sure they wouldn’t post the contents of someone’s entire book to their site and sell ads around it expecting no one to care.
Jim Mendeleyev on April 20th, 2009 3:30 pm
MM, you can’t figure it out because you don’t understand the underlying problem.
First, nobody is playing music for free. Online radio, just like old fashioned radio, already pays for the rights to play the music thru performance licenses such as SESAC, ASCAP, BMI, etc.
The new rates are not for music. They are (try not to laugh out loud) for the mechanical recording. Its a new tax and as of now only online stations and Satellite stations pay it.
Yes, it’s an additional fee structure for music we already pay to play.
Judging from your comments perhaps you don’t believe the artists and labels benefit from airplay? If artists and labels receive no benefit then online radio should stop announcing the artist names and album information.
In case you’ve forgotten, this is music already paid for. Just thought it important to remind you. Its like you buying a car and then discovering that you had to pay all over again for the privilege of driving it.
Labels claim that listeners will record the music and bypass buying CDs. Really? Well anyone with half a brain (that would exclude label execs) will tell you that the worst place to record music online is from an online radio station!
First, we cross fade songs and a new one begins as the current song fades out. Consumers hate this.
Second, we compress signal to fit bandwidth (another thing online stations pay for just in case you wondered). Any kid or young person worth their salt knows that our compression “squeezes” the music and they want full quality–not something that sounds like an improvement over AM but not yet like FM when played back after recording.
Third, there are plenty of sites not related to online stations where people go to record music that is high quality and not compressed.
Fourth, online radio has offered the record companies ways to encode music so that it can’t be recorded. We’re okay with that idea. Funny, the record execs scream like babies when sitting before Congress asking for these EXTRA and ADDITIONAL fees. But when offered workable tech solutions, hmmm….the crybabies aren’t interested. Bottom line: they don’t want a solution. They want cash.
Reminder: only the uninitiated would record music from an online station. I’m listening to a smooth jazz station and would never record from it. It sounds good coming thru my computer speakers but if I downloaded it, the compressed files would sound like crap when played on a good stereo system.
And just in case you work for the record industry, let me remind you that we already pay performance royalities to compensate artists, musicians and labels for the right to play the music.
This is a new tax. Out of the air. Its stupid.
Jim Mendeleyev on April 20th, 2009 3:38 pm
Just a PS…
Some record label execs charge that online stations offer “on demand” so that consumers can record. Again they’re so technically challenged to fail to understand that compressed music sounds like crap.
In the cases of “on demand” broadcasts, online stations pay much higher royalities and that is why so few do on demand. Translation: when doing “on demand” we pay a lot more for the music.
Funny, even TALK stations which play no music are expected to pony up and pay this royality for music we don’t play. Huh? Yes, we pay this fee even for no music. There are ways to opt out of it but the procedure is akin to breaking into Fort Knox so many talk online stations just pay the fees because the reporting (we are required to “prove” that we play no music) is so involved that it’s not worth the effort.
Latest Album Blog on April 27th, 2009 4:35 am
It’s not news that internet radio stations cover both on-demand and live programs and podcasts.Anyway I don’t agree with Jim that worst place to record music online is from an online radio station.
Leave a Reply